The government will do everything to make the financial system work for banks and nothing to make it work for people.
Fed announces details of new interbank service to support instant payments
81–90 of 431 posts
Re: Fed announces details of new interbank service to support instant payments
#82Earlier quoted context omitted.
Americans have such a strange relationship with technology... the most innovative startups, and yet the worse infrastructure. here in Europe it's the contrary :) and btw: the service will be active in 2023 or 2024... while I enjoy immediate transfers bank to bank since years...
Two things (probably more) contribute to this, I think: 1) Americans have been trained from birth to distrust government in all forms. Centralizing more and more services triggers a visceral fear response. (IMO it's nonsense, for the most part, but it's there nonetheless.) 2) Being "first to market" with new technologies often means you're just stuck with the sub-optimal first version, while other countries can learn…
Could also be a forced thing due to being relatively fragmented with many different countries under a union which isn't as tight as the US union of states.
Great thing about the US is that it's possibly the biggest homogeneous market in the world where you can form a lot of reliable expectations of people throughout. By contrast, countries such as China and India are highly diverse culturally. You can't even expect people to be speaking the same language (yes, each have national languages but not everyone speaks them and it's not a first language for many.)
Re: Fed announces details of new interbank service to support instant payments
#83Earlier quoted context omitted.
We already have a national ID. It is called social security, and it is bad at its job because it was explicitly not supposed to be a national ID when it was created.
I responded in more depth to a sibling[0]. SSNs are not valid for use in uniquely identifying individuals. If you try to use an SSN as a primary key for U.S. individuals you are in for a world of pain. [0] https://news.ycombinator.com/item?id=24104158
You may notice, however, that this practice is extremely widespread throughout both the government and private industry. Yes, it is unsuitable for the purpose as parent says, but this is still the de facto purpose. Use of SSNs as identification is so ubiquitous in certain fields that when security concerns around SSNs became apparent in the '90s they were simply replaced with "pseudo-SSNs" which are randomly generated in the same format - which had already been the practice for individuals not possessing an SSN or in other exceptional situations.
Re: Fed announces details of new interbank service to support instant payments
#84If anyone from the FED is reading this I have this advice: don't use ISO20022! (I've been working on the brazilian instant payments project, known as PIX).
It's an overly-complicated-try-to-solve-everything standard that promises interoperability but only delivers pain and misery.
Since each country has its own standards for person and account identification, in dealing with these local realities, the ISO20022 adds quite a lot of complexity. But all this cost does not result in interoperability. In fact, each payment scheme end up with a localized version of the standard, incompatible with others.
What could have been a clean API, ends up a mess.
Re: Fed announces details of new interbank service to support instant payments
#85Settlement between banks in the United States is astoundingly complicated, for (fascinating, terrifying) historical reasons. FedNow is a huge step towards fixing holes that private companies have been papering over for over two decades. Blatant self promotion: for anybody interested in learning more about the Automated Clearing House system (which FedNow will eventually supplement) and interbank settlement in general…
The history of credit cards is also somewhat wild: unsolicited cards arrived activated in the mail, and consequently, a huge volume of credit card fraud was born. Consumer protections came a few years later cleaning up obvious issues. But looking at that story, it seemed awfully reminiscent of the Uber model.
"A piece of the action" is a great book on the history of this.
Re: Fed announces details of new interbank service to support instant payments
#86Nearly all first world countries enjoy instant payments at the point of sale and person to person. It boggles my mind that it has taken this long and a pandemic to even set the gears in motion, all while battling ridiculous levels of cheque and credit card fraud.
US has means of instant payments, it's just not standard across banks. There's lots of way other countries are far behind as well (like Canada having banks that still charge for every transaction you make).
I wouldn’t say Canada is “far behind” because the banks like to rip people off.
We’ve had a single unified payment network for like 40 years. We’ve had instantly settled electronic transfers (Interac e-Transfer) exposed to consumers directly through their institutions for about 20 years. We’ve had chip and pin and NFC contactless payments for quite a long time.
And the rip off is really just the handful of big banks. My credit union (which is in another province but thanks to the unified network and mobile deposit, etc I’ve been able to continue using on the other end of the country without issue or inconvenience) provides free accounts with no per-transaction or other fees. They’re also happy to issue a loan or provide other services online.
Obviously I’m not as familiar with the US system, but I think putting Canada anywhere near the same level as the US is a mistake.
Re: Fed announces details of new interbank service to support instant payments
#87There was a technology that I started seeing about 10-15 years ago (I believe Paypal used it at some point) where bank payments happened "instantaneously" because they were backed by a credit card on file. The bank settlement still took the same amount of time under the hood, but because the credit card acted as a backstop, there was an appearance of an instant payment. I was always surprised at how few merchants adopted this. Hopefully, FedNow will make it totally obsolete.
Re: Fed announces details of new interbank service to support instant payments
#88Earlier quoted context omitted.
Two things (probably more) contribute to this, I think: 1) Americans have been trained from birth to distrust government in all forms. Centralizing more and more services triggers a visceral fear response. (IMO it's nonsense, for the most part, but it's there nonetheless.) 2) Being "first to market" with new technologies often means you're just stuck with the sub-optimal first version, while other countries can learn…
> On the flip side, when I'm in Europe, I definitely run into more places that only take cash, which I find annoying to no end. This is mostly for tax evasion reasons and sometimes for employees skimming off the top. The more “proper” a place, the less likely they are to encourage cash transactions. Happens in US too, of course. It’s always the shady places that are cash only and everyone else is digital.
Or it's Germany. They prefer cash over plastic for privacy reasons.
https://www.npr.org/2019/06/09/728323278/for-many-germans-ca...
Re: Fed announces details of new interbank service to support instant payments
#89Earlier quoted context omitted.
Two things (probably more) contribute to this, I think: 1) Americans have been trained from birth to distrust government in all forms. Centralizing more and more services triggers a visceral fear response. (IMO it's nonsense, for the most part, but it's there nonetheless.) 2) Being "first to market" with new technologies often means you're just stuck with the sub-optimal first version, while other countries can learn…
> On the flip side, when I'm in Europe, I definitely run into more places that only take cash, which I find annoying to no end. This is mostly for tax evasion reasons and sometimes for employees skimming off the top. The more “proper” a place, the less likely they are to encourage cash transactions. Happens in US too, of course. It’s always the shady places that are cash only and everyone else is digital.
That's a bit cynical. While I'm not saying that doesn't happen, I would say that smaller businesses typically accept cash-only to avoid the fees of accepting card payments. And this is not only the 1-2% transaction fee charged by (e.g.) Visa/Mastercard, these fees also include things like
* Fees for the rental and maintenance of payment card terminals.
* Gateway fees.
* Cost of fraud prevention services.
* Fees or premiums to insure against ‘forward delivery risk’
All of this erodes the already thin margins that small businesses typically operate at.
And then you have cash: no fees, instant payment, private.
Re: Fed announces details of new interbank service to support instant payments
#90Earlier quoted context omitted.
I responded in more depth to a sibling[0]. SSNs are not valid for use in uniquely identifying individuals. If you try to use an SSN as a primary key for U.S. individuals you are in for a world of pain. [0] https://news.ycombinator.com/item?id=24104158
You may notice, however, that this practice is extremely widespread throughout both the government and private industry. Yes, it is unsuitable for the purpose as parent says, but this is still the de facto purpose. Use of SSNs as identification is so ubiquitous in certain fields that when security concerns around SSNs became apparent in the '90s they were simply replaced with "pseudo-SSNs" which are randomly generate…
SSNs aren’t unique, and were never intended to be.